From: owner-cablereg-l@netcom.com Date: Sun, 23 Apr 1995 17:09:47 -0700 Subject: Cable Regulation Digest 4/24 Reply-To: higgins@netcom.com CABLE REGULATION DIGEST Summary of regulatory news from Multichannel News 4/24/1995 Vol.2 No.17 Copyright 1995 Multichannel News. Reproduction/distribution is permitted so long as this document is left fully intact. NO CHANGES are to be made to this document without the written consent of Multichannel News. Listserver, Gopher, FTP info attached at bottom. Refer questions to John Higgins (higgins@dorsai.dorsai.org or 212-887-8390) For Multichannel News subscription information: 800-247-8080. A bargain at $78/year. Multichannel e-mail contacts: Marianne Paskowski, editor: Mpcable@aol.com Andy Grossman, news editor andyg474@aol.com John M. Higgins, finance editor: higgins@dorsai.dorsai.org Kent Gibbons, new media editor: kentgibb@well.com Leslie Ellis, technology editor: Ellis299@aol.com QUOTES OF THE WEEK "I guess their wireline network really doesn't work. Why else would they do it?" Century Communications president Bernard Gallagher on PacTel's deal to buy a California wireless cable operator. "We see these technologies as being very complementary. By getting into MMDS we are able to jump start our entry into video." Michael FitzPatrick, president of Pacific Telesis Enterprises. WHITE HOUSE HARDENS TELECOM STANCE Washington -- The Clinton administration's opposition to Senate telecommunications legislation is far broader and deeper than previously stated concerns that primarily related to cable deregulation. The White House last week released a 10-point policy paper that outlined sharp disagreements with virtually every key provision in S.652, sponsored by Sen. Larry Pressler (R-S.D.). In the paper, the administration said it had problems with Baby Bell entry into cable and long distance as well as with the rules that would govern how and when phone companies open their networks to competitors. Although the administration continues to oppose cable deregulation, it enunciated at least one position that closely tracked with the view of the National Cable Television Association. The White House joined the NCTA in supporting a requirement that the Baby Bells offer video programming through separate subsidiaries, which they argue will minimize the risk of cross-subsidization. The Pressler bill would not impose such a requirement. The Senate bill cleared the Commerce Committee last month and could reach the Senate floor in the next few weeks. The White House is raising objections even though the Senate bill passed the Commerce Committee with more Democratic than Republican votes. "This seems an odd time for the administration to step in with an out-of- date point of view on telecommunications reform," said Gary McBee, chief lobbyist for the Baby Bell phone companies. NCTA spokesman Rich D'Amato said the trade group was not pleased with the bulk of the administration's analysis of the Pressler bill. CABLABS LOOKING FOR HIGH-SPEED DATA GEAR CableTelevision Laboratories Inc. last week issued a request for proposal to about 200 companies involved in high-speed data equipment as an addendum to its $4 billion telecommunications RFP released last year. Vendor intentions to bid are due at CableLabs' Louisville, Colo., headquarters just before the National Show May 5, and responses are due on June 9. The datacom RFP project is under the helm of Scott Bachman, vice president of operations technologies for CableLabs. Richard Green, president and CEO of CableLabs, said the main thrust of the RFP is to get data communications equipment into the marketplace as quickly as possible. "The data communications marketplace is another clear revenue generator for cable," Green said, adding that CableLabs will assist in technical evaluations of the RFP responses and will evaluate and test vendor gear, but will leave all price negotiations to participating member companies. "Cable is in a good position to build [this revenue opportunity] and to capture a major portion of that enterprise of delivering bits to the home through devices such as cable modems," Green said. Green said among other things, like spectrum management and data protocol plans, the RFP seeks to identify an interoperable range of equipment that can be used to cost-effectively implement online and Internet connection services. That range will likely start with asymmetrical cable modem configurations, meaning that more data move in the downstream direction to home PCs than in the opposite direction, because early applications like information requests don't require as much speed or bandwidth in the upstream direction. CableLabs and its member companies will also look at cable modems that use a coaxial input for the fast, downstream data and a standard telephone line return. "The idea is to consider [hybrid coaxial/twisted pair] modems as a migration strategy, while the reverse path is being prepared," Green said. Operators can then move to a full coaxial return when their plant can support the 5- to 40-MHz reverse path. The list of MSOs participating in high-speed trials continues to grow: Jones Intercable Inc., Cox Communications Inc., Comcast Corp., Viacom Cable, Tele- Communications Inc., Rogers Cablesystems, Continental Cablevision Inc. and others are all experimenting with different high-speed modem flavors and online service trials. One element of interest to those MSOs, and included in the RFP, is the idea of "spectrum management," or the ability to control the upstream and downstream bandwidth needs of different equipment, like telephony and high- speed modems. "The idea is to be able to dynamically assign bandwidth to different units," said Bill Bauer, president of Windbreak Cable, a small system in Gering, Neb., and one of the executives leading CableLabs' datacom efforts. "Because we have such a limited reverse resource, we don't want to necessarily plunk down 6-MHz for something that's only used occasionally," Bauer said, adding that "instead, we need the ability to use our spectrum intelligently." The spectrum manager should also be able to allocate more bandwidth to a specific application when needed, Bauer said. That application will also be phased in, Bauer said, starting with a manual software management system, where MSOs could "watch" the amount of spectrum used, and manually change it if needed. "Ultimately, however, we want to get to the point where we can automatically assign bandwidth where it is needed," said Bauer. "For example, if we notice that the buffer is too full at one customer's home, we can assign more bandwidth to them, on the fly, until their needs shift back to a lower usage." The RFP will also examine both short- and long-term data protocols, Bauer said. "First, we'll look at what we can get to now, today -- how we can get real with this stuff in the next six months." Green said 43 vendor companies responded to the original telecommunications RFP, and that CableLabs continues to follow up with vendors on that front. PACTEL BUYING CROSS COUNTRY WIRELESS Looking to get head start for its entry into television, telco Pacific Telesis agreed to acquire wireless operator Cross Country Wireless Inc. and blanket Southern California with a competitive video service. PacTel will pay $175 million for Cross Country, one of wireless cable's real success stories. Operating a 42,000-subscriber system in Riverside, Calif., the company also controls license rights covering Los Angeles and San Diego. Cross Country is the third wireless cable operator to dance with the telcos. Last month Bell Atlantic Corp. and Nynex Corp. agreed to invest up to $100 million in CAI Wireless Systems Inc., which has licenses in New York City, Washington and Baltimore. Philadelphia-area operation ACS Enterprises in turn agreed to sell out to the newly funded CAI. PacTel officials asserted that the Cross Country deal will allow them to heavily push video MMDS throughout the lucrative Southern California market in 1996, rather than the several years it will take to build out its planned video dialtone systems. PacTel will not jump immediately. The telco will remain on the sidelines in Los Angeles and San Diego until hardware vendors are able to supply digitally compressed technology, allowing a wireless system to provide 80 to 100 channels of video rather than the 30 or so capacity of most analog operations. "We see these technologies as being very complementary," said Michael FitzPatrick, president of Pacific Telesis Enterprises. "By getting into MMDS we are able to jump start our entry into video." Cable operators now facing heavy competition from PacTel earlier than expected said they were not impressed. Century Communications president Bernard Gallagher, whose largest operation is metro Los Angeles, saw PacTel's move as a comment on its confidence in VDT. "I guess their wireline network really doesn't work." Gallagher said. "Why else would they do it?" Jeremy Stern, vice president of corporate and legal affairs for Continental Cablevision Inc.'s Los Angeles-based region, agreed. "I think if anything, PacBell's video strategy seems a little confused," Stern said. "First they're going to spend $16 billion fibering everyone for video, now they're going wireless to do the same thing." But PacTel disputed that, saying MMDS is a companion service with interactive, high-end VDT service. "If I look at the world of telephony, there's wireline and there's wireless," Camp said, adding that "whether we use wired or wireless, what customers are looking for is better reliability than they're getting today [from cable]." SHOWTIME LAYS OFF 6% OF WORK FORCE Showtime Networks Inc. laid off 45 employees last week as part of a previously announced plan to restructure the Viacom Inc. company to increase efficiency, according to an SNI spokeswoman. The cuts reduce SNI's 750-person work force by 6 percent. While nervous SNI employees had been waiting three weeks to see if they would keep their jobs, industry headhunters reported that they're fax machines were buzzing with resumes from Showtime staffers. In addition to the 45 layoffs, a highly placed SNI source said more than 45 budgeted position that were vacant would remain permanently unfilled. Thus, SNI's work force has been slimmed down by more than 10 percent in total. The SNI source insisted that the goal of the restructuring was to make the company more efficient and eliminate redundant positions, not just to trim salaries from SNI's overhead. "This is not just a reduction in head count, this is to make sure our organization properly mirrors our strategic intentions for the coming years," said the source. "Inertia naturally creeps into every company and that's what happened here. We haven't taken a look at this organization in years." The sources added that several more layoffs may occur in the coming months, but the mass layoffs have been completed. A former SNI executive asserted that SNI could have saved far more money by renegotiating one of its film deals rather than laying off people. Premium networks often pay more than $5 million per title for major theatrical releases. The source said the restructuring has been in the planning stages for months, but the shakeup became public in mid-February when former SNI chairman and CEO Winston H. Cox was first reassigned to a senior vice president position at Viacom Inc. and then left the company. Matthew Blank was promoted to the CEO position to replace Cox. The changes were the first major moves since SNI began to report to Viacom's Blockbuster Entertainment unit, headed by president and CEO Steven F. Berrard. TIME WARNER HOLD TELCO VENDOR POW-WOW Fueled by an aggressive plan to offer local phone service to some of its customers by the end of the year, Time Warner Communications last week hosted a vendor meeting to hammer out the architectural details of what's needed. A request for proposal on the specific telecommunications upgrade elements needed to provide lifeline, residential phone service will follow this week at a Chicago-based vendor meeting hosted by Time Warner Cable's purchasing department. About 15 manufacturing companies, including ADC Telecommunications, AT&T Corp., Sybase Inc., Antec Corp. and Motorola Inc., among others, attended the two-day meeting last week, held in Winter Park, Colo. Also present at the meeting: telecom and cable engineers from all of the Time Warner divisions scheduled for upgrades this ye cluding Rochester, N.Y.; New York City; Columbus, Ohio; Indianapolis; San Diego and Houston and Austin, Texas. "The primary purpose of the meeting was to focus on what the different divisions need to do to get ready for telecommunications-based services," said Steve Pearse, senior vice president of engineering, operations and MIS for Time Warner Communications. Several vendors made presentations to the group, said Pearse. AT&T, for example, gave three briefings on new products including its digital access cross-connect system, its "Fiber Reach" equipment and its SLC-2000 signal loop carriers, said AT&T's Jean Snell. Time Warner is already testing cable phone gear made by Tellabs Inc. within its Rochester, N.Y., system and in newly acquired NewChannels Corp.'s Syracuse, N.Y., system. It is also working closely with AT&T in its alternate access projects. The telecommunications specifications targeted during the meeting augment a recently released upgrade plan from Time Warner Cable, for Full Service Network requirements, said Pearse. "The revised FSN upgrade for our hybrid fiber/coax networks didn't include some of the more rigorous requirements to be a full-fledged telecommunications provider, so we created this addendum," he explained. Specific areas addressed at the meeting, and within this week's RFP, include ways to manage the volatile, 5- to 40-MHz reverse path, network powering, backup powering and network monitoring, Pearse said. "Our plan is to ignite the telecom manufacturing community into building products specific to the cable industry," Pearse said, noting that the RFP is Time Warner's way of "firing the gun and saying, we're off; we need massive amounts of product, let's get to it." Steve Gines, director of corporate purchasing for Time Warner, said the RFP is one agenda item within a larger plan at this week's annual "strategic alliance coalition" meeting. "We'll certainly be discussing quotes for 90-volt powering and standby powering equipment, as well as introducing [purchasing] plans for the newly acquired NewChannels group," said Gines, who described the yearly gathering as a forum to strengthen the vendor/operator relationship. More than 80 Time Warner executives and 120 vendors are scheduled to attend, Gines said. Two of the more critical items in this week's telecom upgrade RFP are taps that pass power signals, needed to fuel the network interface boxes installed in homes, and power generators needed for backup when utility electricity goes down. Time Warner already has said it is leaning toward 90-volt powering, pending the satisfactory resolution of safety issues for both consumers and linemen. Several other operators are seeking ways to send power signals down drop cables, including Tele-Communications Inc., Cox Communications Inc., NewChannels and Comcast Corp. Most current tap configurations do not pass power. Time Warner is also seeking generators fueled by natural gas or propane to provide backup power at each optical node. "The power generators currently on the market are designed for RBOCs, and cost between $10,000 and $40,000," Pearse explained, adding that "what we need costs between $2,000 and $3,000, and is significantly smaller." Specifically, Pearse wants a 90-volt generator that kicks in automatically when utility power fails, that can be located near a natural gas line for fuel while still providing backup power for the 500 homes served by each optical node. RURAL OP LEASING BANDWITH FROM TELCO Douglas Communications Corp. wants a way to increase channel capacity from 30 to 60 channels in its small Nebraska properties, without the prohibitive expense of a total rebuild. The company may have found a solution in an unlikely source: the local independent telephone company. Douglas and Lincoln Telephone & Telegraph have discussed the lease of the latter's excess bandwidth to the operator to technologically "cluster" several widely separated, low-density systems. "We thought that [Lincoln] might just lease us the space, and we figured, if you don't ask, you'll never know the answer," said Douglas senior vice president Michael Pohl. What Douglas wants is a way to link its systems in southeast Nebraska. The small systems, some covering as few as 100 homes, serve 8,000 customers from 12,000 passings "with lots of flat prairie land in between." Every community is treated as a separate node. The operator figured the telephone company might have bandwidth to spare, since demand can't be that great for enhanced services such as call waiting and call forwarding on farmland. A broadband lease will allow the operator to transmit signals on existing fiber, rather than string its own, and collapse its 38 headends in five sites. The telephone company doesn't find the lease proposal that alien. "It's a simple business decision," said Lincoln spokeswoman Lela Kelliher, who compared the arrangement to when the telco leases space to MCI Communications Corp. That doesn't mean the telco isn't interested in getting into video. Kelliher said the company will determine if a trial is possible in its territory. Neither side would discuss the deal in detail, since it has not been signed, but Pohl said the pact includes a non-compete clause for each business -- Douglas has vowed not to launch telephone service in Lincoln territory and Lincoln will not do video. "I believe small telephone companies have it in their minds that they can't do it better, whatever `it' is. I think they will get over it and see cable as a part of their business plan," Pohl said. SECOND PCS AUCTION COMING THIS SUM R Washington -- The Federal Communications Commission is looking to resume its spectrum auctions for personal communications services this summer, rather than next fall or later as had been feared. The auctions for broadband PCS licenses had been held up by a legal challenge from a Mississippi telephone company prevented from bidding in the next round. But the stumbling block was removed last week when Telephone Electronics Corp. (TEC), based in Jackson, Miss., withdrew its lawsuit after it was able to strike an independent business deal that gives it access to the PCS field. Under the deal announced Tuesday, TEC will service Mississippi portions of a PCS license won in an earlier auction by PCS PrimeCo L.P., an alliance of AirTouch Communications, Bell Atlantic Corp., Nynex Corp. and U S West Inc. FCC officials hailed what they called "a private settlement" and said their only role had been to approve a license-partitioning request, something they said was routinely granted. The officials said the Commission would require at least 75 days (perhaps by early July) to set up the next auction round -- the 30-MHz "entrepreneurial" C block, designed to ease PCS entry for minorities, women and small businesses. TEC's lawsuit had threatened to push the auctions back until at least next fall. The telco argued that the FCC's eligibility rules, which exclude companies with gross annual revenues exceeding $125 million or total assets of more than $500 million, were arbitrary. It also challenged the constitutionality of affirmative action provisions giving minorities and women bidding preferences. -=-=-=-=-=-=-=-=-=-=-=-=-=-=And Finally...-=-=-=-=-=-=-=-=-=-=-=-=- The folks inside GI are feeling pretty hip -- and comfy -- these days. The "hip" comes from the fact that the Philadelphia-area manufacturer donated about 10 set-top boxes to ABC's N.Y.P.D. Blue for use in interior scenes. GI execs said they were surprised by the call, but agreed to send the boxes along. "Apparently, they wanted to exactly duplicate the Manhattan environment, even down to the set-tops," said a GI-er. Local operator Time Warner Cable uses GI boxes there, and N.Y.P.D. Blue wanted the real McCoy. As for feeling "comfy," an internal memo issued last Wednesday by GI president Larry Osterwise authorized daily "bu ness casual" dress, meaning anything but ripped jeans and shorts. Said one exec: "It was pretty unexpected, and everybody seems happy about it ... except for those of us who have little but suits hanging in our closets. Guess we'll be headed to the mall." The memo didn't mention a clothing allowance. ------------------------------------------------------------------------- HOW TO GET THE CABLE REGULATION DIGEST: E-MAIL - To: listserv@netcom.com Subject: Ignored Body: subscribe cablereg-l FTP - ftp.vortex.com/tv-film-video/cable-reg GOPHER - gopher.vortex.com/*** TV/Film/Video*** WWW - http://www.vortex.com/pn/cable1.html *--30--*